Alion plans refinancing to avoid default

With $850 million in annual revenue, and $570 million debt coming due, Alion Science and Technology is planning on refinancing, and it could be a risky move, according to Fed Biz Daily. The McLean-based company is hopeful, with Alion CEO Bahman Atefi claiming that “investors are showing great support for our strategy and our long-term outlook.”

The company plans to refinance its existing debt structure with a proposed five-year, $65 million revolving line of credit, a five-year, $300 million first-lien term loan and a five-and-a-half year $50 million second-lien term loan, Fed Biz Daily reported. In order to refinance another $235 million owed, though, Alion is planning an exchange offer, providing the lender the ability to take securities or rights to ownership in exhance for debt owed, or a cash payment of $600 for every $1,000 borrowed.

The company finds itself in this situation because, according to one unnamed financial analyst, it paid too much for its acquisitions in the past, and has not been able to fully recover from it. Alion’s workforce carries the risk in this transaction because the company is employee-owned, so if the company defaults, the equity holders in the employee stock ownership plan will be wiped out, Fed Biz said.